Feb 26 2008

To stealth or not to stealth

We’ve announced four initial Foundry investments (Lijit, Memeo, Oblong and Zynga) – in press releases by the companies, on our personal blogs or on the new Foundry web site.  Truth be told, we’ve made a fifth investment which we’re not talking about much.  That’s because it’s in "stealth" mode (shhhh).  There are varying degrees of stealth, ranging from companies that won’t tell anyone what they are up to, to companies (like the one I’m referring to)that don’t have a web site and haven’t made any announcement of their business intentions or funding but aren’t hiding what they are doing in daily industry conversations, etc.  This stands in stark contrast to companies (such as Path 101), which are all buy live blogging their board meetings and actively talking about their product and development plans. 

So what’s a business to do?  The pro-stealth argument is based on the theory that the more people know about what you’re doing before you actually do it, the less likely you are to be successful and the more likely are you are attract competitors.  The stealth-is-a-waste-of-time argument is based on the idea that at the end of the day, its all about execution anyway and that there are some benefits to letting the world in on what you’re up to in the form of increased exposure to potential customers, partners and investors and the collective input of those paying attention to what you’re up to.

I personally favor the pro-stealth argument, although I believe I may be alone among my partners in this view (we’ll see what their respective responses are to this post).

When a company is in a product development phase and has the financial backing it requires I just don’t see the upside of telling the world what its up to before it has anything to show for its efforts. In our case, StealthCo has the backing of two large investors (Foundry and one other), has several customers and partners with whom its is working to develop and refine it’s product and has at least two competitors whom we believe we will be able to surpass with our first product release (one of whom ironically came out of stealth mode itself in response to the other doing the same).  We don’t have a web site and neither investor has announced the deal outside of reports to our respective investors.  That said, we are actively engaged in conversations within our industry and have been recruiting a board of advisors and talking about our intentions at trade events, etc., so we’re not being entirely secretive about what we’re up to.  For us, I think this is the right path to take.  Given our access to early customers, our strong financial footing and a few competitors, I just don’t see the benefit in making a general public announcement of our intentions.  Instead, our plan is to complete our initial product and "launch" with a handful of very prominent customers at a time when we really have something to shout from the hills about.  You can be sure I’ll let you know here as soon as that time has come.

I’d love to hear your perspective on this topic.  Please comment away!